Editorial: Wrong prescription

Sunday

May 29, 2011 at 12:01 AMMay 29, 2011 at 10:52 AM

A provision in the Ohio House-passed budget bill that is intended to save Medicaid dollars would do little good for the public and much harm to the hospitals on which Ohioans depend for care. It should be removed before a final budget is passed.

A provision in the Ohio House-passed budget bill that is intended to save Medicaid dollars would do little good for the public and much harm to the hospitals on which Ohioans depend for care. It should be removed before a final budget is passed.

Under current law, most Ohio families receiving Medicaid assistance are enrolled in managed-care plans, administered by private, for-profit companies under contract with the state. Hospitals negotiate contracts with those care plans, spelling out not only what the hospitals will be paid for various services but many other important aspects of the business relationship: how promptly the care plan will pay bills, how disputes will be resolved and whether the plan has an adequate range of physicians and specialists in its network of providers.

The contract allows each party to hold the other accountable.

Language in the House budget would upend this fundamental legal principle by depriving hospitals of all negotiating leverage.

The provision states that, should a hospital fail to reach a contract agreement with a managed-care plan, it must accept and treat patients enrolled in that plan anyway, and must provide the care at the basic Medicaid rate. Those so-called fee-for-service rates typically are lower than the rates hospitals negotiate through contracts with the care plans.

What a sweet deal for the managed-care plans: They could stonewall reasonable contract demands by hospitals, knowing that even without a contract, they can send their patients to the hospital and pay lower rates to boot. And they won't have to live by any contract requirements to pay bills on time, maintain an adequate roster of physicians or otherwise behave reasonably.

This destructive language has been introduced twice before, and previous legislatures had the good sense to reject it. The Senate should follow suit.

Legislators know the provision would have the effect of lowering the rates paid by care plans to hospitals; that's why they attributed to it an estimated savings of $119 million.

But that savings would come at the cost of lower-quality service to Medicaid recipients and a further financial squeeze on hospitals, which already bear a substantial burden in caring for Medicaid patients. The rates Medicaid pays for services are lower than hospitals' costs to provide those services, averaging about 82 cents on the dollar. In 2009, Franklin County's 12 nonprofit hospitals provided more than $174 million in care to Medicaid patients for which they weren't reimbursed.

Driving Medicaid rates even lower will force hospitals to compensate by charging everyone else more. That means higher premiums and co-pays for every hard-working Ohioan.

That leaves hospitals, Medicaid patients and those paying for private insurance all worse off. And the purported savings to the budget likely would be undermined by unintended bad consequences. For example, if the care plans don't maintain an adequate network of physicians, patients will skip routine and preventive care and will end up using emergency rooms for basic medical care. The high cost and inefficiency of that option will cut into any savings realized through paying hospitals less.

The only beneficiaries would be the private companies - most of them based out of state - being paid to manage Ohio's Medicaid dollars. Last year, they had a combined profit of $221 million.

They should not be given that privilege and a free pass to avoid good-faith negotiation.